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Future of China-US ties amid intensifying trade war

By Sitwat Waqar Bokhari

US Vice President Mike Pence’s searing speech last Thursday accusing China of military aggression, commercial theft, rising human rights violations, and even meddling in America’s upcoming elections, has left a deep dent in the two global giants’ already tensing relations. In a meeting held between Chinese Foreign Minister Wang Yi and US Secretary of State Mike Pompeo in Beijing on October 8, discussions took a tense turn when the Chinese chief diplomat asserted that the US’ ‘misguided actions’ have affected the mutual trust between the two sides.

The meeting also cast a shadow on the prospect of China-US relations in the future. Besides blatantly denouncing China’s global and domestic policies, the United States has also been engaging in arms sales with Taiwan; a self-ruling democratic island that China considers its rebel province. Moreover, the US also recently sent its top-level officials to the island, even though Washington recognizes Beijing over Taipei.

It appears that the Trump administration, which has just finished redrafting trade agreements with its North American partners, the European Union, and South Korea, finds China as its biggest trade irritant. The superpower has garnered the support of a policy community that is worried about the Asian giant’s military assertiveness and willingness to flout global norms, concerning international investments and property rights, and is using this as the basis to confront the trade rival.

Trump’s demands, however, have become too extreme while suggesting that China should reduce its bilateral trade surpluses with the US, and eliminate tariffs that adversely affect US Republican voters. While the US and China have many interrelated problems, President Trump seems to have made a big deal out of their bilateral trade imbalance.

The US economists do not see this as a problem, though, stating that China has trade deficits with many countries that export natural resources to it. United States exports its natural resources, especially its agricultural and energy products, to other countries instead. To achieve any trade surplus with China, the US would need to export those products to China instead which would have no effect except resulting in US’ trade deficits with those countries.

The recent escalation of tariffs between the two in their bilateral trade since early 2018 sees no precedent in history since the Great Depression. The trade war began with the US placing tariffs on imports of solar panels and washing machines from China, escalating currently to covering US $259 billion of imports of Chinese goods. Economists believe these tariffs do not remedy any market distortions but lead to raising costs and increasing uncertainty.

While the two countries have had an agreement over efforts to curb North Korea’s nuclear ambitions, their trade tensions and, especially, United States’ blatant charges against China in the United Nations have almost caused fears of full disengagement from China towards the US. Analysts at the Brookings Institute believe that the world’s first and second largest economies cannot possibly completely disengage, regardless of the actions of their particular administrations. Nevertheless, it is clear that Washington is becoming increasingly uncomfortable with growing Chinese economic dominance in its trade and financial arrangements. As a result, the impulsive, tit-for-tat tariff escalation is only proving ineffective and could cause lasting damage to both economies and to the critical US-China geopolitical relationship.

Notwithstanding, China continues to express its wish to pursue cooperation with the US and “not descend into conflict and confrontation” which would go against the interests of both the peoples, as stated by the Chinese Foreign Minister. To forestall further US tariffs, China has been seeking to hold talks with the US to reach an agreement. The US Secretary of State though claimed that the purpose of his visit to China at the end of his Asian trip this Monday was to address the disagreements the US has with China regarding its policies. Both sides, during the meeting, openly disagreed over who had called it off.

A meeting between President Trump and Chinese President Xi Jinping is now reportedly scheduled for the next month at the G-20 summit in Buenos Aires. The strategic moot is being anticipated by many as a possible ice-breaker in the two giants’ intensifying trade conflict.

The author Sitwat Waqar Bokhari is a Research Fellow at the Center for Research and Security Studies (CRSS), and Program Manager of CRSS’ sister organization – Afghan Studies Center. She tweets @SitwatWB.

 

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